Are you over-spending on shopping? Here are tips on how to avoid it

If the claims by e-commerce websites are to be believed, Indians bought goods worth more than Rs 10,000 crore in the first week of October. Flipkart claims to have sold 15.5 million units during its five-day sale. Amazon was not far behind with 15 million units and may have already crossed the mark. Snapdeal saw a nine-fold increase in sales volume during its Unbox Diwali discount offer. The company says its first day sales weighed nearly 3,000 tonnes, enough to fill 20 Jumbo aircraft.

An over-shopping epidemic is raging across India. Some are compulsive shoppers, who just can’t stop themselves from buying the things they like. Others are buying to show off or to gain the approval of their peer set. There are also bulimic shoppers who will grab anything with a fat discount—whether they need the item or not is immaterial.

The profusion of choices offered by e-retailers and the convenience of online payments have only made matters worse. Most buyers, especially the younger set, don’t realise that every unnecessary purchase pushes back their long-term goals. “Shopping is not a vice, but it can become a problem if the expenses prevent the individual from saving for critical financial goals,” says D.P. Singh, Executive Director and Chief Marketing Officer, SBI Mutual Fund.

In Pic: Radhika Sachdev 36, Gurgaon"I started SIPs in mutual funds and recurring deposits so that the money gets invested before I can spend it."

A voracious online shopper, her wardrobe had clothes she hadn’t worn even once. But the realisation that she will need an eight-figure sum for her son’s education 11 years later has changed her. The family now eats out less frequently and she’s not shopping online too much.

Gurgaon-based management consultant Radhika Sachdev knows this only too well. Till last year, the 37-year-old management consultant was a voracious shopper who was forever browsing e-commerce websites for latest clothes and online deals. “I was shopping nearly every other day. My wardrobe had clothes that I had not worn even once,” she says with a hint of guilt in her tone. Sachdev transformed from a compulsive buyer to a prudent investor after she heard a friend talk about her son’s higher education. “She was paying Rs 35 lakh for a five-year medical course. I calculated that 11 years from now, I would require around Rs 1.5 crore for my son’s education,” she says.

The derailing of financial goals is not the only problem that compulsive shoppers face. In its extreme form, shopaholism can ruin careers, wreck relationships and cause disharmony in married life. An online survey conducted by ET Wealth earlier this year found that spending too much was the most common reason for money arguments among couples. The problem was very pronounced (52%) among younger couples below 30, and gradually decreased (34.9%) among older people after 40. It is another matter that 60% of the male respondents considered ‘careful spending’ an appealing trait in their partner while only 36% female respondents appreciated this quality in spouses.

Apart from familial clashes, shopping too much can also put the buyer on the wrong side of the law if the expenses do not reconcile with the income declared in the tax return. Credit card companies and merchant establishments report to the tax department if the expenses on a credit card exceed certain limits. The wife of an IAS officer got a tax notice recently for online shopping worth Rs 10 lakh. “The tax department will want to know how you are able to pay the high bills when your income is so low,” says Sudhir Kaushik, Cofounder of tax filing portal Taxspanner.com.

How to avoid overshoppingDo you also overshop? You could be suffering from the problem and not be aware of it. Take the test on Page 6 to know where you stand and if you need to take corrective steps. If you are unsure whether to purchase a product, turn to Page 14 to know how to resolve such dilemmas. Apart from these, here are a few steps that can help.

Junk plastic: The six square inches of plastic in the wallet of a shopaholic is the biggest culprit. Studies show that even normal people tend to overspend if they use a credit card because they don’t feel the pinch. To suppress the shopaholic inside you, leave your debit and credit cards behind when you go to the mall. Take cash instead. That’s what Mumbai-based IT professional Harshada More does to rein in her urge to spend. “It doesn’t pinch when you pay by credit card because you don’t feel the money go. But when the bill comes, it hurts,” she says.

In Pic: Harshada More 27, Mumbai"It doesn’t pinch when you pay by credit card because you don’t feel the money go. But when the bill comes, it hurts like hell."

She realised the perils of using plastic when she ran up a huge credit card bill. She did not feel the pinch when she was swiping the card. Her credit card is now only for emergencies and she pays cash when she shops. She also keeps a separate budget for discretionary spending.

Experts recommend extreme measures to control serious shopping addicts. Some say you should note the details and then cut up the card so that you can’t use it. Others suggest you stick pictures of your kids or spouse on the card to remind you of goals you may be jeopardising with an unnecessary purchase. One bizarre idea is to literally freeze the card inside a block of ice. It won’t damage the card but the user will have to wait for the ice to melt before he can access it.

Invest before you spend: One way to ensure that your spending habits don’t derail your financial goals is to put your investments on auto pilot mode. Sachdev has started SIPs in mutual funds and a recurring deposit in her bank. “This ensures that the money gets invested before I can spend it,” she says.

Wait before you spend: Whenever you want to buy something expensive, postpone the purchase by 30 days. During that cooling off period, think hard whether you really want the item. If the item was not really essential you would get over the urge and probably junk the idea. This works effectively in case of gadgets, apparel, footwear and accessories. It’s also not difficult to follow because you don’t actually deny yourself the item. You merely postpone the purchase by a month.

Resist peer pressure: A lot of young people spend because everybody around them is also doing so. Don’t spend just because others are splurging on gadgets and gizmos. For all you know, they might be spending for the same reason. “When buyers learn to distinguish between wants and needs, they make better choices,” says Singh of SBI Mutual Fund.

Don’t shop to destress: For some people, shopping is therapy that helps them unwind after a stressful day. But this therapy has a side effect that can make matters worse. Experts say that people who turn to shopping to destress are only digging a deeper hole for themselves. Seek professional help for your stress related problems rather than seek an escape route through shopping.

Treat yourself once in a while: Crash diet don’t work because they are too harsh on the individual. Similarly, it will not help if your budget denies you even small pleasures. Earmark a small amount every month that you can spend on anything you like. “We should be able to treat ourselves once in a blue moon. It’s just that this blue moon should not come every fortnight,” says More. We agree.